Did anyone seriously think this would last forever?
Many recent home buyers bet the house (literally) on expectations of continued low interest rates and dramatic appreciation gains. Many believed that a new market reality was emerging. This was due in large part to factors associated with ‘globalization.’ Here the prevailing wisdom said that greater liquidity in capital markets would put a cap on inflation concerns and that low rates would persist ad infinitum. Wow; they couldn’t have been more wrong. Energy, massive federal debt, and politically destablizing factors were somehow left out of this equation. Here are a couple of thorough articles that may finally help put this argument to rest (you can tell that ‘PIMCO’ – in the first article – has a good deal of experience here):
I couldn’t have said this better myself…in fact, I probably wouldn’t have even come close. If you’re in a pinch there are a number of resources I’d like to recommend…I’ll discuss those in a later post though.
The evidence mounts: Home-price growth hits the brakes